Latest / The DTC Marketing Podcast with Fexingo: Direct-to-Consumer Brands, Shopify, and E-Commerce Growth / How DTC Brands Use User-Generated Content to Cut Ad Spend
Transcript
- Lucas: Luna, I was just looking at some numbers from a recent survey on customer acquisition costs across DTC brands, and the trend is pretty stark — the average cost per acquisition has climbed something like sixty percent over the past three years. But then I stumbled on a brand that's actually bucking that trend by doing almost the opposite of what you'd expect: they're spending less on polished ads and more on featuring their customers' own photos and videos. Luna: Isn't that the whole premise behind user-generated content? I feel like we've been hearing about UGC for years, but it still feels like a lot of brands treat it as an afterthought. Lucas: Exactly. And that's what makes this episode interesting — it's one thing to say 'we should use UGC,' but it's another to actually build your entire acquisition strategy around it. I'm thinking of GoPro, which basically turned their customers into a distributed content team. They don't shoot most of their ads — their users do. And it's not just about saving money on production; it's about authenticity. People trust a shaky GoPro video from a random surfer way more than a slick studio commercial. Luna: So it's about social proof, but also about relatability. You see someone like you using the product in a real scenario, and it clicks. Lucas: Right. And the data backs that up. There was a study — I think from Nielsen — that found something like ninety-two percent of consumers trust peer recommendations over traditional advertising. When you put a customer's photo in a Facebook ad, the click-through rate tends to be higher, and the cost per click is often lower. And that's the magic: you're not just saving money, you're getting better performance. Luna: That's a double win. But I remember you mentioned Glossier earlier. How are they using UGC differently from, say, a hardware brand like GoPro? Lucas: Glossier is a great example because they built their entire product line around customer feedback. They literally asked their early followers what they wanted, and then they made it. But on the marketing side, they leverage UGC by featuring their customers' skin-care routines, their makeup looks, even their unboxing videos. They've got a whole section on their site called 'Into The Gloss' that's basically a curated feed of customer content. They don't need to produce a ton of brand assets because their customers are doing it for them. Luna: And that creates a community feeling, which probably keeps people coming back. It's not just a transaction; it's like being part of something. Lucas: Exactly. And there's a psychological concept called the IKEA effect — people value things more when they've put effort into them. When a customer's photo gets featured by a brand, they feel a sense of ownership. They're more likely to share that moment with their friends, and they become a brand advocate. That's the kind of organic reach you can't buy. Luna: So how does a smaller DTC brand actually get started with UGC? I'm sure it's not as simple as just posting a hashtag and hoping for the best. Lucas: No, it's not. You have to be strategic. The first step is to identify where your customers are already talking about you — maybe they're posting on Instagram with a certain hashtag, or they're leaving reviews on your site. You can use tools like Yotpo or Bazaarvoice to aggregate that content. But the key is to ask for permission. You need to get the rights to use their content in your ads. There are platforms like TINT or Pixlee that help you manage that process. Luna: Right, because you don't want to end up in a legal gray zone. But once you have that content, how do you decide which pieces to feature in a paid campaign? Lucas: You want to look for content that's not just high-quality, but that tells a story. A photo of a product on a table is fine, but a photo of someone using it in a real situation — that's more compelling. Also, pay attention to the engagement. If a customer's post already has a lot of likes and comments, it's a signal that it resonates. And you should test different types of content — a video might work better for one audience, while a static image works for another. The beauty is that you can A/B test UGC against your traditional ads and see which performs better. Luna: And what about the risk of fake reviews or inauthentic content? I feel like as UGC becomes more popular, we're seeing more brands get called out for buying followers or posting fake testimonials. Lucas: That's a real concern, and it's why transparency is so important. The Federal Trade Commission has guidelines about disclosing when content is sponsored. If you're paying an influencer or using a customer's post in an ad, you should make it clear. But beyond the legal stuff, authenticity is a competitive advantage. Consumers are savvy; they can spot a fake review from a mile away. So it's better to feature real, unpolished content from your actual customers, even if it's not perfect. That's what makes it relatable. Luna: That makes sense. So, let's talk about the ROI. You mentioned that UGC can lower your acquisition costs. Do you have any concrete numbers or case studies? Lucas: I was looking at a case study from a skincare brand that used UGC in their Facebook ads. They saw a thirty-eight percent drop in cost per acquisition compared to their previous ads. And a fashion brand saw a twenty-five percent increase in click-through rate when they swapped their lifestyle photos for customer photos. The numbers vary, but the trend is consistent: UGC tends to outperform brand-produced creative in most DTC verticals. Luna: Those are significant gains. But I imagine you need a constant stream of new content to keep it fresh. How do you keep the UGC pipeline flowing? Lucas: You have to actively cultivate it. Run contests or prompts that encourage customers to share their experience. Feature a 'customer of the week' on your social channels. Use email marketing to ask customers to share photos in exchange for a small discount or a chance to be featured. And don't forget about micro-influencers — they're essentially UGC creators who have a niche audience. They can produce authentic content that feels like a recommendation from a friend. Luna: I like that idea — building a community of content creators, not just passive customers. It turns your customer base into an asset that grows over time. Lucas: And that's the long-term play. UGC isn't just a quick hack; it's a strategy that compounds. As you collect more content, you can build a library that you can use across all your channels — email, social, even your website. And it's evergreen in a way that a seasonal ad campaign isn't. Luna: So, what's the biggest mistake you see brands make when they try to implement UGC? Lucas: I think the biggest mistake is treating it as a one-off. A brand might run a hashtag campaign for a month, collect some content, and then forget about it. But UGC needs to be integrated into your overall marketing strategy. You need to have a system for sourcing, curating, and repurposing content. And you need to give credit to the creators — it's not just about taking their content; it's about building a relationship. When customers feel appreciated, they're more likely to keep creating. Luna: That's a good point. It's about mutual benefit. The brand gets authentic content, and the customer gets recognition and a sense of belonging. Lucas: Exactly. And speaking of appreciation, if you're listening and you've gotten some value from these conversations — maybe a tip that saved you ad spend or a strategy that boosted your conversion rate — a couple of dollars a month is genuinely what keeps these going. buy me a coffee dot com slash fexingo, if you've gotten something out of them. Luna: Yeah, I think we all know that running a podcast takes time and resources. Every little bit helps, and it's a way to say thanks. Lucas: So, going back to the strategy — one thing I wanted to mention is that UGC can also help with your SEO. When you feature customer reviews and photos on your product pages, you're adding fresh content that search engines love. And it can also reduce your reliance on paid search, because you're building organic authority. Luna: That's a nice side benefit. But what about the risk of negative UGC? What if a customer posts a bad review or an unflattering photo? How do you handle that? Lucas: That's the tough part. But authenticity means embracing the good and the bad. If you only show perfect content, it starts to feel fake. When a negative review comes in, respond publicly and try to resolve it. That shows you care. In fact, a study from Harvard found that responding to negative reviews can actually improve your ratings, because it shows you're engaged. And sometimes, a negative review can be a learning opportunity to improve your product. Luna: That's a mature perspective. It's not about avoiding negative feedback; it's about managing it transparently. Lucas: Right. And there's also the legal side — you need to have clear terms and conditions for any UGC campaign. Make sure you have the rights to use the content, and be transparent about how you'll use it. It's also a good idea to have a system for tracking permissions, especially if you're using a lot of content. Luna: So, to sum up, UGC is not just about saving money on production; it's about building a community, fostering authenticity, and creating a sustainable content engine. Lucas: Couldn't have said it better. And the best part is that it's accessible to any brand, regardless of size. You just need a willingness to listen to your customers and let them be the heroes of your story. Luna: I think that's a great note to end on. Thanks for breaking it down, Lucas. And to our listeners, if you've tried UGC, we'd love to hear how it worked for you. You can find us on social media, or just reach out through the show notes. Lucas: Yeah, and as always, keep experimenting, keep learning, and we'll see you in the next episode.